Connect with us

Daily News

Airtel For Removal Of Bank Guarantees, Jio Says It’s OK In M&A

Airtel and Jio on Monday were once again pitted against each other on another key issue involving transfer and merger of telecom licences.

While Airtel wants the government to relook at the current merger and acquisition (M&A) policy and allow faster approvals and seamless transition, Reliance Jio has asked Department of Telecom to maintain status quo relating to addressing pending dues and demands from licencees.

The divergent views surfaced during an open house on “Reforming the guidelines for transfer/merger of telecom licenses” organised by telecom regulator in the wake of constantly changing scenario in the sector.

Airtel said the current M&A policy does not deal with all types of transactions. Therefore, the M&A policy requires a serious review to deal with all situations.

The policy also required to be relooked for the reason that in almost all cases, the merging entities have been compelled to seek relief before various courts against many provisions of the merger guidelines, either before or after the merger, it said.

On the same, Reliance Jio, however, has asked Department of Telecom to maintain status quo relating to addressing pending dues and demands from licencees.

As per the current merger guidelines, all demands, relating to the licences of the merging entities are required to be cleared by either of the two licensees before the permission of merger/demerger.

Currently, DoT seeks the clearance of dues both at the time of in-principle and final merger approval. The whole process of clearance of dues is quite cumbersome and leads to significant delays in merger process, Airtel said.

“The DoT should not insist on clearance of outstanding dues for both the transferor company and the transferee company given that all liabilities are being transferred to the transferee company. If the dues are to be cleared as well, the same should be for a fixed date on which the dues are required to be cleared and that should be prior to the final approval of the merger by the NCLT. All objections of the DoT are raised once and not at multiple occasions”, Airtel said.

Another key area, which Airtel said needs reforms, is that the applicant companies are required to submit a bank guarantee towards the outstanding demand of one-time spectrum charge (OSTC) in respect of transferee company. “This requirement is unreasonable on account of the fact that DoT asks the merging entities to provide bank guarantees in respect of amounts that have been stayed by a court of law,” said Airtel.

It is unfair that once a particular demand has been challenged by the TSPs in any court and they have obtained the stay against such demand, they are asked to secure the same by way the bank guarantee. “Therefore, this particular requirement should be removed in the merger guidelines”, it said.

A Reliance Jio presentation said: “The present provisions in the guidelines related to addressing the pending dues/demands from licensees are adequate and should be maintained as is. This will protect the interest of the licensor and provide clarity /transparency to the merged entity in conducting their future operations”.

It said the current framework facilitates M&A activity in the sector while ensuring an effective competition in the sector.

Airtel also stated: “Therefore, we suggest that TRAI should recommend DoT to permit other methods of transfer of business including the ”Slump Sale” as well. This will enable the merging entities not to take only the NCLT merger process, which otherwise takes a longer period and go for other options as well”.

Airtel was of the view that since DoT is already a part of the NCLT merger proceedings, the merging entities should not be required to approach DoT separately for its approval and the approval of DoT should be a part of the NCLT merger/demerger process.

Jio wants that in the event of a merger, if either the transferee or the transferor have a marketshare higher than A50% in the given service area before the transfer/merger of licence, the same should be allowed to be maintained as market share of the merged entity and not mandated to reduce below 50%.―Outlook India

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!